| > Special Offer < Refer a friend, if they sign up you get a free month of the Upgrade CPT Dashboard |
| My Youtube Channel | Facebook Group | My CC Podcasts | FREE Spreadsheets | CPTDashboard.com |
| Click here | Click here | Click here | Click here | Click here |
|
| | | | |
| DISCLAIMER: This trade is based on this date. I'm not suggesting a move up or down. I'm showing my trade that I have already done. I'm not recommending this stock as a purchase/trade. Think of it like this, I'm 'Showing you the World thru my Eyes'. |
| NEW TRADE ALERT |
|
| Wednesday, January 22, 2020 |
| | | | |
| Covered Call Trade opened using a Covered Call + Dividend Capture Strategy |
| | | |
|
| NEW Covered Call position with 3M Corp. (MMM) this week |
| | | |
| If my shares are taken at expiration, this is the CCW KRUM! |
| TRADE KRUM! (see details below) | DAYS | Cash on Cash % | Annualized |
| $2,504.00 | 38 | 7.02% | 67.44% |
| | | | |
| Brief Description of WHY I did this trade and my expectations for it |
| 3M has its earnings next week and with the ex-date being the middle of next month, I figured I'd write a covered call with a 7 day after ex-date expiration so possibility collect the dividend and then have my shares taken ... classic CCW+DIV Capture play ... slow and steady |
| | | | |
| MAX PROFIT PROJECTION - See below the profit on the other possible outcomes |
| COMPANY | SYMBOL | SHARES | PRICE | TOTAL COST |
| 3M Corp. | MMM | 200 | $178.32 | $35,664.00 |
| EXPIRATION DATE | DAYS | STRIKE | OPTION | CoC % GAIN |
| Feb-28 | 38 | $187.50 | $1.90 | 7.02% |
| DIVIDEND | DIVIDEND GAIN | OPTION GAIN | STOCK GAIN | TOTAL KRUM |
| $1.44 | $288.00 | $380.00 | $1,836.00 | $2,504.00 |
| All calculations above are based on collecting [ Stock move + CCW + DIV if offered] |
| Yes, they offer investors a dividend and will be distributing it during this trade time frame |
| | | | |
| Current Stock Price | Implied Volatility | Imp Vol (+) | Imp Vol (-) | DELTA |
| $178.32 | 24.00% | $199.72 | $156.92 | 0.25 |
| | $199.72 | | |
| $178.32 |  | With Implied Volatility being 0.12% to reach $199.7184 in this 38 day period, with this Covered CallStrike Im hoping the stock moves just 0.0685195154777928% of that 0.24% Implied Volatility | |
| | $156.92 | | |
| What is Implied Volatility? - Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy. - source: Zacks Investment Research |
| | | | |
| Important Trade Details |
| Trade details - 2 contract(s), Strike Price $187.5 , Premium of $1.9, with a 43889 expiration date receiving a total credit of $380 per share |
| Already had 200 shares for $178.32 , $35664 , total investment. |
| The will be a 38 day trade |
| This Out the Money (OTM) Covered Call trade has a potential Cash On Cash Return of : |
| Covered Call w/ Dividend Capture shares ARE taken, hold shares thru ex-date I make $12.52 per share, or 7.02 %- Annualized 67.44% |
| Covered Call w/ Dividend Capture shares are NOT taken, hold shares thru ex-date I make $3.34 per share, or 1.87 %- Annualized 17.89% |
| Covered Call w/ Dividend Capture shares ARE taken PRIOR to Ex-Date (-DIV) I make $11.08 per share, or 6.21 %- Annualized 67.44% |
|
| Dividend during this 38 day period? Yes EX-Dividend date is Jan-28th, $1.44 |
| Earnings Report during this 38 day period? Yes Earnings Report is (~) date of Jan-28th |
| | | | |
| Did this trade meet the Golden Rules? |
| SP500 type | Earnings? | Dividend | Volume? | Open Interest? |
 |  | | |  |
| Yes they are | Yes Earnings | Yes they do | Yes they do | No < 100 |
| ER is next week with expiration being 38 days out ... not worried about volatility ... OI was light but got my price :) |
| | | | |
| This Covered Call trade has 2 typical outcomes |
| CC - Outcome #1 - the stock moves above my strike price of $145 at expiration, I have my shares taken away and I make MAX gain for this trade 12.89% Cash on Cash investment for this 32 day trade |
| CC - Outcome #2 - the stock does not move above my strike price of $145 at expiration, I do not have my shares taken away and I make only the option premium of $9.55 per share for this 32 day trade. I keep my shares. |
|
| | | | |
| Further research with - Using charts for technical analysis, Dividend information and Earnings Report Date |
| RSI, SUPPORT LINES | KELTNAR, OBV | | DIVIDEND | EARNINGS REPORT |
| View Chart-MMM | View Chart-MMM | | Verify-MMM | Verify-MMM |
|
|
|
| Yes | Yes |
| $1.44 | Jan-28th |
| |
| | | | |
| Always look at a companies chart ... it tells a story and that story could be UP or DOWN |
 |
| | | | |
| How I could 'Manage' this trade should the stock rise or fall prior to expiration |
| I could manage this Covered Call - #1 - The stock moves and closes on expiration above my strike price. My shares will be given assigned to the Call Buyer, I will be given cash for my shares (strike price) |
| I could manage this Covered Call - #2 - The stock does not close at or above my strike by expiration, I will likely not have my shares taken from me. I keep my shares, I keep the Covered Call premium. Trade ends. Shares become available to trade. |
| I could manage this Covered Call - #3 - Regardless of where the stock moves during the Covered Call timeframe, a news event or Ex-Date prompts the Call buyer or market maker to take my shares before expiration. Most common situation, the stock has moved up and now trades near or above the strike price making it profitable to exercise the Call option early for the Call Buyer to collect the dividend. |
| | | | |
| Education Corner |
| Great Covered Call video posted at | |
| Covered Call - Description - A covered call is a financial market transaction in which the seller of call options owns the corresponding amount of the underlying instrument, such as shares of a stock or other securities. ... writing (i.e. selling) a call generates income in the form of the premium paid by the option buyer. Source - https://en.wikipedia.org/wiki/Covered_call |
| | | | |
| Disclaimer - Yes - at the time of this posting I do have a position in this equity. By posting this I am by no means recommending this equity and am not front running for its performance. I have risked my own money and am accountable for the trade results. |
| | | | |
| Remember, the content of this site is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Please read the full disclaimer posted below and visit cptdashboard.com for my privacy policy. |
| | | | |
| Image credits - stockcharts.com | barchart.com | foolcdn.com | yahoo.com | earningswhispers.com | and me :) |
| | | | |
© 2020 Core Position Trading, LLC and the CPT Dashboard - All Rights Reserved
| | | | Disclaimer |
| | | | |
